Manufacturers In The Courts: December 2010

A Publication of the National Association of Manufacturers
December 2010

The NAM's appellate litigation program is wrapping up the year having participated in a near-record 51 cases affecting manufacturers, including 9 petitions for review challenging EPA greenhouse gas and other decisions, 4 actions to intervene in other environmental suits, and 38 amicus briefs.

The most promising recent development is the Supreme Court's decision to review the American Electric Power v. Connecticut case (see summary below). The case presents a substantial opportunity for the Court to reaffirm the basic ground rules for how this country's public policy should be made.

Government regulation and the interpretation of federal law continues to demand the bulk of our attention, as the EPA and plaintiffs' lawyers press an aggressive agenda of regulation and regulation by litigation. Outlined below is December's case activity.

Decided Cases

Punitive Damages

Manufacturers await further clarity in punitive damages cases. The Supreme Court has declined to hear an appeal supported by the NAM of an Oklahoma state court decision that imposed a $53 million punitive damage award on top of an award of $750,000 in a breach of contract dispute. The punitive damages portion is far greater than the Court has found acceptable in other rulings that compare the ratio of the punitive damages to the actual damages in the case, and some states use techniques that inflate actual damages, thereby also inflating punitive damages. We will continue to watch for cases in which this is occurring. Shell Oil Co. v. Hebble (S. Ct.).

Pending Cases


A window opens to end "regulation by litigation" cases. The Supreme Court announced Dec. 6 that it will decide whether courts are the proper forum to hear public nuisance cases that are filed to regulate greenhouse gases. The NAM has long challenged such litigation as raising political questions that are not appropriate for the courts; instead, regulatory limits on manufacturing should be decided by the legislative and executive branches, which can consider a range of policy issues and can balance the interests of a wide variety of affected groups. We participated in this case in the lower court, and urged the Supreme Court to review the ruling. The questions to be decided also include whether states and private parties have standing to sue and whether federal common law implies a remedy to cap carbon dioxide emissions. American Electric Power Co. v. Connecticut (S. Ct.).

Court deals temporary setback to NAM's greenhouse gas challenge. The U.S. Court of Appeals for the District of Columbia Circuit on Dec. 10 rejected the motion by the NAM and other industry groups for a partial stay in the Environmental Protection Agency's implementation of greenhouse gas regulations. While disappointed in this preliminary decision, we believe our legal arguments present a compelling case, and the court could well agree with us as the case moves toward a ruling on the merits. The court ruling on the requested stay addressed only the degree of harm expected from the EPA's implementation plan. The court did accept the NAM Coalition's recommendation for a single panel to hear the cases, and we expect briefing to begin in the next month or two.

The greenhouse gas regulations place unnecessary burdens, costs and uncertainty on manufacturers at a time when the allocation of resources is critical to the nation's ability to create and retain jobs.

NAM files brief in challenge to EPA's denial of Texas Flexible Permit program. On Dec. 3, the NAM and others filed their principal brief arguing that states have substantial discretion under federal law to adopt flexible requirements that apply to minor changes in plant operations as long as air quality is protected. We also argued that the Texas program meets all the federal Clean Air Act standards, is in some cases years ahead of schedule, and the EPA's action more than 15 years after the adoption of the Texas program has no legal support. EPA has failed to defer to Texas' interpretation of its own regulatory laws, as required by federal law. This litigation is intended to eliminate the ambiguity of EPA's latest actions and to restore predictable air pollution control regulation in Texas. Texas v. EPA (5th Cir.).

Labor Law

NAM urges review of donning and doffing case. The NAM filed an amicus brief Dec. 2 urging the Supreme Court to review a ruling that requires a company to pay for time that employees spend changing clothes, even though that time was specifically excluded from working time by a collective-bargaining agreement, and federal labor law allows such an exclusion. Wage agreements sometimes exclude such changing time from time worked, in return for a higher rate of pay, but the lower court ruled that Wisconsin law is not preempted by federal law and the exclusion of such time is not allowed. Thus, the company must pay wages for the changing time at the higher negotiated rate. We argued that Congress has already addressed this issue in the Fair Labor Standards Act and that the Wisconsin law is preempted. The issue is important to industries with collective bargaining agreements and the custom and practice of excluding clothes-changing time from working time. Kraft Foods Global, Inc. v. Spoerle (S. Ct.).

Right of Privacy for Manufacturers

Supreme Court to rule on FOIA's business privacy exception. A provision in the Freedom of Information Act (FOIA) prevents the disclosure to third parties, like competitors or trial lawyers, of information compiled for law enforcement purposes that could reasonably be expected to constitute an unwarranted invasion of "personal privacy." The Supreme Court has accepted for review a case to decide whether personal privacy includes business records, since "persons" are defined by FOIA to include businesses. Federal agencies routinely process FOIA requests without regard to the privacy interests of corporations, and the NAM filed an amicus brief Dec. 15 arguing that corporations enjoy easily recognizable privacy interests and that government investigative powers should not be used to serve private ends, or to cause harm or embarrassment unrelated to proper investigative purposes. FCC v. AT&T, Inc. (S. Ct.).

Securities Fraud Litigation

NAM supports application of efficient market theory to benefit defendants in securities litigation . The NAM filed an amicus brief on Dec. 17 supporting Supreme Court review of a Ninth Circuit ruling that gives plaintiffs the benefit of the efficient market theory to avoid proof of reliance in a fraud case, but that does not give defendants the same benefit when corrective disclosures are made. Review in this case would help eliminate the uncertainty and unpredictability of securities litigation. Apollo Group, Inc. v. Policemen's Annuity and Benefit Fund (S. Ct.).


Look for a full wrap-up of this year's litigation, and a look ahead, in January. Happy holidays and best wishes for 2011!

Quentin Riegel
Vice President, Litigation & Deputy General Counsel
(202) 637-3058 •

National Association of Manufacturers
1331 Pennsylvania Avenue, NW Suite 600
Washington, DC 20004-1790

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